Source: Wall Street
Author: Zhu Xueying
Among the respondents, stagflation has become an "overwhelming consensus". BofA strategist: most fund managers increase their cash holdings and reduce their holdings of stocks.
Just as Goldman Sachs Group stressed that US inflation will decline rapidly in 2023, Bank of America Corporation's latest survey of fund managers also shows that respondents expect global inflation to start cooling next year.But they do not think the Fed will cut interest rates in tandem with the easing of inflation, and fears of stagflation are already on their minds.
The survey, conducted from November 4 to November 10, involved 272 fund managers with total assets under management of $790 billion.
Bank of America strategist Michael Hartnett wrote in a report on Tuesday that the survey results showed that 85 per cent of respondents thought global inflation would fall over the next 12 months, a record high.However, 92% of respondents are worried about stagflation, that is, economic growth will continue to slow, but inflation will still be above average, which has now become an "overwhelming consensus".
The survey results also show that most investors believe that the Fed will stop raising interest rates only if the Fed's preferred indicator of inflation, the core PCE price index, falls below 4 per cent, while core PCE still rose 5.15 per cent in September from a year earlier.
It had helped global stock markets "bottom out" after falling to a two-year low last month as markets expected the Fed to stop aggressively raising interest rates. But some strategists have warned that such discussions are "premature" because Fed officials have hinted that there is room for further rate increases before inflation cools significantly.
And given that market sentiment remains "extremely pessimistic", investors' expectations of a recession are at their highest level since April 2020.Hartnett thinks the S & P 500 should be sold when it rises more than 4100 points (nearly 3 per cent higher than yesterday's closing price). The survey results also show that most fund managers increase their cash holdings and reduce their holdings of stocks under the influence of pessimistic expectations.
Highlights of the survey results:
1. Investors believe that persistently high inflation, a deteriorating geopolitical situation, a tough attitude of central banks, a deep global recession and systemic credit risk events are the biggest tail risks.
two。 For the first time since the survey was launched, investors expect US bond yields to fall over the next 12 months.
3. The most crowded hot trades: long the dollar, oil, ESG assets and Treasuries, short European stocks.
4. Investors reduced their holdings in technology stocks to the highest level since August 2006 and increased their holdings in energy stocks for the 18th month in a row.
Edit / tolk